Bath tests the water with plans for tax on tourists

A tourist tax on hotels to help to pay for local services is being considered in Bath, which is lobbying the government to allow local authorities to introduce the charge.

Bath is lobbying for the right to tax its one million overnight visitors a year

Councillors believe that revenue from the tax would help to offset the £37 million of cuts that the local authority is being forced to make over the next five years.

Edinburgh has previously considered introducing a tourist tax but any such levy in England would need a change in the law at the national level.

In a statement Bath & North East Somerset council said: “A tourism levy is something that the council originally proposed in its budget a number of years ago. The idea was to increase income and support investment in the city and surrounding area.

“The council has recently started to discuss the matter again with the government and is exploring the feasibility with other local authorities.

“As Bath welcomes such a large number of tourists from all over the world, it is sensible to consider the potential for increasing the council’s income to help support local services, invest in the local area and address the financial challenges it faces.”

Charles Gerrish, a Conservative councillor and cabinet member for finance and efficiency, said that Bath wanted to introduce a “bed tax” that would be paid by everyone staying in a hotel or bed and breakfast.

“If you go on holiday in Europe . . . when you stay in a hotel, you are asked to make a very small contribution to the local authority in addition to your hotel bill.

“It is something we believe, in an area that receives as many tourists as we do from all over the world, we ought to be allowed to consider,” he told BBC Radio Bristol.

Several European cities, including Venice, Florence, Paris, Berlin and Barcelona, already charge hotel taxes but VAT on accommodation is much lower in these countries. VAT adds 20 per cent to the cost of a hotel room in the UK but only 10 per cent in France, Italy and Spain and 7 per cent in Germany.

A tax of £1 per person per night in Bath would add £28 to the cost of a week-long stay in the city for a family of four. In 2014, 969,900 tourists stayed at least one night in Bath, suggesting that the tax could raise millions of pounds.

However, the plan is likely to anger the hotel trade, which is losing business to Airbnb. Hoteliers say that the American holiday lettings website already has an unfair advantage because holidaymakers using it do not have to pay VAT on the cost of their stay.

The British Hospitality Association opposes the imposition of tourist taxes and has called for a cut in VAT on accommodation.

In December, the trade body warned that the number of leisure tourists coming to Britain had dropped for the second consecutive month despite the expected boost from the fall in the value of sterling.

Edinburgh first proposed a tourist tax in 2011 but scrapped the idea three years later before saying last year that its introduction was once again likely. The council believes that a tax of between £1 and £4 a night, depending on the time of year, could raise £15 million.